Minicab licensing

November 13th, 2017 by James Goudie KC

In R Milton Keynes Council v Skyline Taxis and Private Hire Limited (2017) EWHC 2794 (Admin) considered an appeal with respect to offences under the Local Government (Miscellaneous Provisions) Act 1976 of operating a vehicle as a private hire vehicle for which a licence was not in force and the driver of which was not licensed.  The Divisional Court set out the legal background as follows.

There are two types of car available for hire to transport passengers, namely hackney carriages (or “taxis”) and private hire vehicles (or “minicabs”), to which different rules apply. The appeal concerned only the latter. Moreover, it concerned only the provisions which apply to out-of-London private hire vehicle operations. Different provisions apply to minicabs in London.

One of the main differences between the two categories of hire vehicle is that only taxis can ply for hire on the streets. Private hire vehicles can only be hired to transport passengers on a pre-booked basis through an operator licensed by the relevant local authority. Indeed, by virtue of Part 2 of the 1976 Act a vehicle may not work as a private hire vehicle in a controlled district unless there are in existence three licences.

  1. i) An operator’s licence issued under Section 55. Section 55 provides that a local authority shall, on receipt of an application for the grant of a licence to operate private hire vehicles, grant to that person a licence unless it is satisfied that that person is not a fit and proper person and, if the applicant is an individual, he has not been disqualified from driving. The local authority may attach such conditions to the licence as it considers reasonably necessary (Section 55(3)).
  2. ii) A vehicle licence issued under Section 48, which sets out matters about which the local authority must be satisfied before issuing such a licence, such as the suitability, safety and comfort of the vehicle.

iii) A driver’s licence issued under Section 51, which again sets out matters about which the local authority must be satisfied, such as the fitness of the person to hold such a licence.

The underlying purpose of this regulatory regime is “… to provide protection to members of the public who wish to be conveyed as passengers in a motor car provided by a private hire organisation with a driver” (St Albans District Council v Taylor [1991] RTR 400 at page 403A-B per Russell LJ). It is well-established that, to enable coherent regulation and enforcement, in respect of any hiring, all three licences must be issued by the same local authority (Dittah v Birmingham City Council [1993] RTR 356), something which has been called “the trinity of requirements”.

Again as part of the regulatory and enforcement scheme, Section 56 requires the holder of any Section 55 operator’s licence to keep such records as the local authority “may, by condition attached to the grant of the licence, prescribe and shall enter therein, before the commencement of each journey, such particulars of every booking of a private hire vehicle invited or accepted by him, whether by accepting the same from the hirer or by undertaking it at the request of another operator, as the [local authority] may prescribe” (Section 56(2)); as well as particulars of any private hire vehicle he operates (Section 56(3)). The licensing authority therefore controls the level and nature of the record keeping of any operator. An operator is required to produce such records on request to any authorised officer of the local authority. A breach of the requirements of Section 56 is a criminal offence (Section 56(5)).

“Operate”, for the purposes of Section 55, has been considered in a series of cases, including Britain v ABC Cabs [1981] RTR 395, Windsor and Maidenhead Royal Borough Council v Khan [1994] RTR 87, Adur District Council v Fry [1997] RTR 257 and Bromsgrove District Council v Powers (Unreported) (16 July 1998). These firmly establish that, in this context, “operate” does not have its common meaning. Rather, it is a term of art defined strictly by Section 80(1) as meaning “in the course of business to make provision for the invitation or acceptance of bookings for a private hire vehicle”. Therefore, as Dyson J said in Powers:

“… [T]he definition of the word ‘operate’ focuses on the arrangements pursuant to which a private hire vehicle is provided and not the provision of the vehicle itself…. [T]he word ‘operate’ is not to be equated with, or taken as including, the providing of the vehicle, but refers to the antecedent arrangements.”

Section 46(1)(e) provides:

“[N]o person licensed under the said Section 55 shall in a controlled district operate any vehicle as a private hire vehicle (i) if for the vehicle a current licence under Section 48 is not in force; or (ii) if the driver does not have a current licence under Section 51”;

and, if any anyone knowingly contravenes that provision, he is guilty of an offence.

However, because of the limited definition of “operate”, he only commits an offence if, in the course of business and in a controlled district, he makes provision for the invitation or acceptance of bookings for a private hire vehicle in circumstances in which the vehicle and/or the driver do not have the required licence(s). That too is firmly established by the cases. Therefore, for these purposes, it is irrelevant (e.g.) where the customer might be picked up, or where the contract for hire might have been made, or where any particular booking might in fact have been accepted. So, in giving the judgment of the Divisional Court in Khan, McCullough J said (at page 92):

“The determining factor is not whether any individual booking was accepted, let alone where it was accepted, but whether the person accused has in the area in question made provision for the invitation or acceptance of bookings in general”.

Who accepts the booking is, however, important; because, by Section 56(1), for the purposes of Part 2 of the 1976 Act, every contract for the hire of a private hire vehicle is deemed to be made with the operator who accepts the booking for that vehicle whether or not he himself provides the vehicle.

Under the provisions as originally enacted, therefore, it did not matter if the booked journey passed through an area other than the controlled area in which the operator had an operator’s licence, or even if the pick-up was outside that area. Nevertheless, the operation was to a substantial degree geographically restricted. Over and above the trinity of requirements, if the operator who had accepted a booking did not have a driver/vehicle licensed by the same authority to do the job, although he could get another operator within the same area to provide a vehicle, he was proscribed from transferring or sub-contracting the job out to a firm outside the controlled area even if that firm used a driver and vehicle licensed in that same, other area (Powers).  However, as from 1 October 2015, Section 11 of the Deregulation Act 2015 inserted new Sections 55A and 55B into the 1976 Act, which, for the first time, allowed sub-contracting by operators, expressed by reference to “first operator” and “second operator”.

With regard to these new provisions, three matters worthy of particular note are:-.

  1. i) Although they use the term “sub-contracting” and “sub-contracted booking”, for these provisions to be effective in respect of a particular booking, no legal contract is required between the first and second operators: the first operator merely has to “arrange” for the second operator to provide a vehicle to carry out the booking. The effect of such an arrangement is sometimes said to “transfer” the booking to the second operator, although the statutory provisions themselves do not use that term.
  2. ii) Section 55A(3) is a deeming provision. Where an operator has an operator’s licence in more than one controlled area, he can use a driver and vehicle in a controlled area other than the area in which he accepts the booking. However, by Section 55A(3), where he does so, the licence in each of those areas is treated as being held by a different legal person.

iii) Where a booking is the subject of a Section 55A arrangement, Section 56 enables the local authorities involved to require records of the booking to be kept by both the first and the second operator.

In this case, the Court, at paragraph 46, did not accept the proposition that, under Section 55A, the first and second operators have to have separate controlling minds. Hickinbottom LJ said: “The provisions clearly contemplate a single operator having multiple operator’s licences in different areas; and there is nothing in the legislative scheme to suggest the operative in each area has to have a separate and distinct controlling mind”.  At paragraph 47, he rejected the proposition that, an overarching arrangement having been set up to be implemented through a computer rather than individuals on telephones, the second operator had to take a distinct positive decision to accept each and every particular booking; and at paragraphs 48-54 inclusive rejected the proposition that the second operator must accept the booking, actively and physically, in its own district.

Section 55A(1)(b) is focused, not upon place of acceptance, but the district in which the sub-contracted booking is accepted as a booking. To maintain the trinity of requirements, as Section 55A does, it is vital that the second operator accepts the booking as one made in the district in which he has an operator’s licence. It is in that manner that the integrity of the scheme is maintained. Therefore, when seen in the context of the regulatory regime as a whole, it requires that the second operator “is licensed under Section 55 in respect of another controlled district and the sub-contracted booking is accepted as a booking subject to the licence in that district…”. That construction is consistent with the principles underlying the regime; and is clearly the construction to be preferred. Parliament could not have intended to enact legislation, designed to make the regulation of minicabs better fitted to modern times, that requires “manual” systems and ignores the commercial use of computerised systems.

This construction does not undermine the underlying purpose of the scheme, namely to provide protection to the public who use minicabs. It maintains the trinity of requirements which, whilst regulation and enforcement is in the hands of local authorities, remains a fundamental plank of the scheme. Section 55A inherently allows the “transfer” of a booking outside the controlled area where the initial, first operator operates; but the requirements for both the first and the second operator to maintain records ensures that any authority can ascertain, relatively quickly, which operator, driver and vehicle is involved in any minicab booking.

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